The study was carried out to provide further evidence on the concept of openness by examining\nits effect on cocoa output and the direction of causality between cocoa output and identified\nvariables of interest in Ondo state. Data collected for the period 1980 ââ?¬â?? 2012 was analyzed\nusing the dynamic ordinary least square (DOLS) method. The study also applied the error\ncorrection method and conducted both stationarity and co-integration tests. Results showed\nthat all the variables were non-stationary at level but stationary at first difference i.e 1(1). The\nco-integration test showed the existence of co-integration among the variables implying the\nexistence of sustainable long run relationship among the variables of interest. The ECM also\nshowed that 57% of changes in the short run toward long run will be corrected per year. The\nresult of granger causality test showed the evidence of unidirectional causality between cocoa\noutput in Ondo State and ratio of credit to private sector, which run strictly from cocoa output\nin Ondo State to the ratio of credit to private sector. It follows from the result that increase in\ncocoa output will serve as a positive indicator that will encourage lending to cocoa farmer and\nsubsequently boost productivity. The study concluded that trade openness did not significantly\ninfluence cocoa output in the study area while domestic price was significant, though negative.\nThe study therefore recommends that the government should ensure that cocoa farmers are\nadequately motivated by getting appropriate value for their cocoa output.
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